Coles CFO Charlie Elias reacts to Senate supermarket inquiry findings

A senior Coles executive says it will study the Senate supermarket inquiry recommendations but warns there are some it couldn’t support.

Coles is considering the findings of the supermarket inquiry. Picture: Tara Croser

Coles chief financial officer Charlie Elias said the supermarket giant is still working through the recommendations from a senate inquiry released late Tuesday.

Some recommendations, which did not receive cross party support, include supermarkets being forcibly broken up if they engage in anti-competitive behaviour, however there was agreement on a mandatory code of conduct between supermarkets and suppliers such as farmers.

“We are very mindful that consumers out there face cost of living pressures, whether it’s mortgages, rent, energy, and groceries,” said Mr Elias. “We’ll study the recommendations. To the extent that the number of the recommendations for example, go to really impacting fair and free competition for example (in) food and grocery, (there) are things that we couldn’t support. But the other thing is the mandatory code of conduct. We do support that and so we’ll work through those and provide considered responses.”

The Greens-led senate inquiry was called to investigate price gouging by the supermarkets but heard that their margins were below 3 per cent.

Mr Elias said that he was happy with where Coles sat on pricing compared with its similarly large competitor Woolworths and lower priced rivals such as Aldi.

‘We are very mindful that consumers out there face cost of living pressures’

“I’m really happy with where we are relative to our competitors,” Mr Elias said.

But he warned that generally speaking grocery prices were not dropping.

“I don’t believe the sector is in deflation,” he said. “I believe it’s in inflation but it is moderating more in that 2-3 per cent range.”

In order to retain its earnings growth, Coles is looking to a number of initiatives to bring down costs to the business and launch new products.

One of those is its new online pet business, called Swaggle.

The online retailer will sell a broad range of products such as Royal Canin, Black Hawk many of which are most often purchased from specialty stores such as private equity owned Petbarn.

Mr Elias said the pet industry is worth about $5bn and Swaggle – which was only launched just over a month ago – is showing promise.

“It’s really early days, what we like about it is the innovation it drove within Coles taking an idea and concept to the market in a really short period of time,” he said.

The company is also pleased with the progress of its Coles 360 media business, which is now two years old and sells advertising in-store and on YouTube to its suppliers. It had sales of more than $220m in fiscal 2023.

Mr Elias said 360 had enjoyed a 30 per cent growth rate.

“It’s a growing part of our business,” he said. “We are really pleased with how we are doing in that space.”

The CFO also said e-commerce was an essential growth space.

“We’ve been really pleased with the growth in e-commerce. We’ve seen growth in click and collect and home delivery. I’m really excited about that next phase. We have to have a really competitive immediacy offer. Having a world class next day delivery is important,” he said.

The company has also improved its loss rate within supermarkets, halving the 80 basis points experienced in the previous financial year.

“Loss is one area that should improve, ‘available’ should improve, logistics costs are improving. None of that is shelf related. It’s about becoming a more efficient and productive supermarket.”